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How we pay for our richest landowners

From £2.7m for Serco to £750,000 to the Duke of Westminster, an NS investigation shows just how much our biggest landowners receive each year in state handouts.

A political consensus has hardened that there are too few houses being built and that our planning laws are too restrictive. Equally most people seem to believe that too much of Britain, especially England, has been bulldozed and obliterated; that our land is less pleasant and less green with each passing year. In fact, only 10.6 per cent of England (and 6 per cent of Britain) is developed. The myth spun about this country is that land is scarce. It is not – landowners, many of them aristocrats who acquired their land through a quirk of ancestral good luck or who benefited from the Norman Conquest, the dissolution of the monasteries or the enclosure of common land, are paid to keep it off the market through a system of European Union agricultural subsidies (see table below). What is scarce is land on which there is planning permission to build.

Yet the question of who owns Britain, how the land came to be owned and what it means for the rest of us has never been answered adequately. The Labour Party, for example, never speaks of the need for a land value tax (which is supported by Martin Wolf, the Financial Times’s influential economics commentator) and does not mention land reform, which was once a great reforming Liberal cause.

It was Britain’s iniquitous system of land ownership that prompted Herbert Asquith to pass the Parliament Act in 1911 and assert the primacy of the House of Commons over the House of Lords, one of the most redoubtable defenders of the landed interest.

More than a century later, the situation is little improved. The United Kingdom is 60 million acres in size, of which 42 million acres are designated “agricultural” land and 12 million are “natural wastage” (forests, rivers, mountains) owned by institutions such as the Forestry Commission, the Ministry of Defence and the National Trust. The remaining six million acres are the “urban plot”, the densely congested land on which our houses, factories and offices are built. (Most of the 62 million people of these islands live on just three million acres.)

What this means, in effect, is that 69 per cent of British acreage is owned by less than 1 per cent of the population, or 158,000 families
(the so-called cousinhood), a concentration of ownership unrivalled in western Europe with the exception of the kingdom of Spain.

Green, unpleasant land

This maldistribution of land is one of the primary, if largely unacknowledged, causes of the current housing crisis. Though there is no shortage of land in Britain, little of it is available for development, given the enduring dominance of a landowning elite. The frequent lament
that the countryside has been “concreted over” is unsupported by evidence. The UK National Ecosystem Assessment, published in 2011, and the most comprehensive survey of the country’s natural environment and resources ever undertaken, concluded that just 6.8 per cent of the UK’s land area could be classified as urban. Even this figure overstates the extent of development. In England, for instance, where 10.6 per cent of land is designated as urban, 54 per cent of that total is green space (parks, sports pitches, cemeteries and so on), with domestic gardens accounting for 18 per cent and water (rivers, canals, lakes and reservoirs) for 6.6 per cent. In sum, 78.6 per cent of English urban land is designated as “natural” rather than built.

In the UK as a whole, it is “enclosed farmland” that accounts for by far the largest share of land (40 per cent), followed by mountains, moorlands and heath (18 per cent) and woodland (12 per cent, a figure that has doubled since 1945). For those who question why UK homes are both the smallest in Europe and the most expensive, the answer is that 90 per cent of the population lives on just 5 per cent of the land. Viewed in this context, it is unsurprising that so many believe this is an overcrowded country in which rapacious developers have monopolised what little space remains.

That this system has endured, contrary to all reason, is testimony to the power and influence of those who benefit from it. The largest private landowner, not just in Britain but in Europe, is Richard Scott, the 10th Duke of Buccleuch and 12th Duke of Queensberry, who inherited his property empire on his father’s death five years ago. He owns 240,000 acres, including the Queensberry Estate, with its headquarters in Drumlanrig Castle, Dumfries, and the Langholm Estate on the Dumfriesshire-Cumbria border, worth an estimated £1bn in total. His nearest rivals include the Duke of Westminster, who owns 133,100 acres (worth £6bn) and whose Grosvenor Estate includes the most valuable real estate in London (in Belgravia and Mayfair), and Prince Charles, who, in his cap­acity as Duke of Cornwall, owns 133,602 acres worth between £1bn and £1.2bn.

Were the government to announce that, despite their considerable means, these individuals would receive extensive subsidy from the taxpayer, there would be predictable outrage. Yet, in the form of the EU’s Common Agricultural Policy (CAP), such a programme (let’s call it “aid for aristocrats”) already exists. The average British household contributes £245 a year to the CAP, most of which is handed to the wealthiest landowners. Originally established with the intention of supporting small farmers and reducing Europe’s reliance on food imports, the CAP, which accounts for over 40 per cent (€55bn) of the EU budget, has become a slush fund for assorted dukes, earls and princes. Payment is based on acreage alone and takes no account of wealth, making the scheme one of the most regressive – the more you own, the more you get. In addition, since the EU’s definition of “farmer” does not require individuals to produce food or other agricultural products, many recipients are, in effect, paid not to farm.

A Freedom of Information request by the New Statesman to the Department for Environment, Food and Rural Affairs (Defra) reveals that the largest landowners received millions of pounds in taxpayer subsidy last year. The Duke of Westminster, a multibillionaire, was paid £748,716 for his ownership of Grosvenor Farms, the Earl of Plymouth £675,085, the Duke of Buccleuch £260,273, the Duke of Devonshire £251,729 and the Duke of Atholl £231,188 for his Blair Castle estate. It was also a lucrative year for the Windsors. The Queen received £415,817 for the Royal Farms and £314,811 for the Duchy of Lancaster, while Prince Charles was paid £127,868 for the Duchy of Cornwall. Similarly well-remunerated was Saudi Arabia’s Prince Bandar bin Sultan, who received £273,905 for his 2,000-acre Glympton Estate in Oxfordshire, allegedly purchased with proceeds of the 1985 al-Yamamah arms deal between Britain and Saudi Arabia. The largest individual UK beneficiary is Sir Richard Sutton, who was paid £1.7m for his Settled Estates, the 6,500-acre property near Newbury that he inherited with his baron­etcy in 1981, despite net assets of £136.5m.

Other unlikely recipients include Harrow School, which received £4,622, Severn Trent Water, which was paid £779,436, and the outsourcing company Serco, currently cashing in on the government’s privatisation of NHS services, which, courtesy of the public, received £2.7m in land subsidy. With EU member states simultaneously cutting jobs, wages and services at the behest of Brussels, it is socialism for the rich and capitalism for the poor.

Aware that it cannot legitimately sustain such corporate welfare at a time of austerity, the EU has vowed to reform the programme by capping direct payments at €300,000 and by ensuring that only “active” farmers receive subsidy. But even under these proposals, due to be implemented in 2014, the EU will still provide aid to landowners who derive just 5 per cent of their annual revenue from agricultural activity; and, in the case of the cap, the biggest farms will be able to avoid it simply by restructuring.

The Conservative Party seldom misses a chance to bash the Brussels bureaucrats, and yet, because of its enduring ties to the landed gentry, one hears little from it about the inequity of the CAP or the order it helps sustain.

Land reform is now both a political and an economic necessity for Britain. Here is an issue that should galvanise both the Liberal Democrats and Labour.

Jason Cowley is editor of the New Statesman.

George Eaton is editor of The Staggers blog.

This article first appeared in the 24 September 2012 issue of the New Statesman, Lib Dem special

Picture: SÉBASTIEN THIBAULT
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Jeremy Corbyn, Emmanuel Macron and the age of volatility

The rise of populism in Britain and France is the result of a restless “crowd electorate”. Both countries' future stability depends on their changing relationship with the EU.

Britain seems to have joined the rest of the democratic world in the volatility of its politics. Electorates are no longer armies, but crowds. Identities shaped by religion, class, region, ideology and tradition weaken. Conventional parties are hollowed out, and disoriented and angry voters turn to single-issue campaigns or insurgent populism. In every country this takes diverse forms shaped by political institutions and political cultures – Donald Trump and Bernie Sanders in America, Marine Le Pen and Emmanuel Macron in France, Beppe Grillo and the Five Star Movement in Italy, Nigel Farage’s Ukip and now Jeremy Corbyn’s Labour Party.

The trend, noticeable from the 1990s, was analysed in a now classic work by Peter Mair, Ruling the Void: the Hollowing of Western Democracy, which was published in 2013, two years after the author’s death. Elected governments had conceded powers to non-elected agencies such as the IMF, the World Bank, the World Trade Organisation (WTO), and above all the EU. Politicians had become professionals, largely detached from civil society and operating increasingly within these international institutions, “safe from the demands of voters”. Citizens were decreasingly willing to join professionalised political parties financed by large donors or public funds, or to identify strongly with them.

Membership fell across Europe and beyond, and among the sharpest falls were those in France and Britain, where levels of political participation had previously been high. Electoral turnout fell too.

As Mair saw it, “hand in hand with indifference goes inconsistency”, as low levels of participation were paralleled by rising levels of volatility. People who did vote for mainstream parties often changed allegiances at random, and made up their minds at the last minute in response to short-term factors. Others flooded into new movements, or even old ones that reinvented themselves as enemies of the system.

The political effects of the 2007-08 banking crisis are still being felt everywhere and subsequent policy failures have aggravated the discrediting of elites. Naturally, the most volatile element has been the young. Youthful radicalism is hardly new. In my youth, inspiration came from Mao, Che Guevara and even the Khmer Rouge. Now it comes from elderly white males such as Bernie Sanders, Jeremy Corbyn and Jean-Luc Mélenchon, who seem able to present old remedies as new revelations to those inevitably lacking political memory. Historians are perhaps tempted to seek precedents. My own choice is the 18th-century radical John Wilkes. His brilliantly provocative tactics made fools of successive governments and appealed to a largely London-based electorate.

Wilkes’s secret – apart from barefaced cheek – was that he was not seeking office. It has been liberating for Sanders, Corbyn and Mélenchon that they were not expected, and did not expect, to win, and hence were free to run election campaigns that were not programmes of government but protest movements aimed at generating maximum support and momentum. Brexit seems to have further liberated the British left. Only the hardest of Brexits would give free rein to a radical programme of nationalisation and support to industry, which would contravene EU legislation on equal competition and restrictions on state aids.

This kind of populism is a new phenomenon in modern British politics, because never has a major party entered a campaign with such an absolute conviction that it would lose. And never has the Labour Party been so dominated by the ideas and campaigning style of the hard Left: the ubiquitous rent-a-crowd, the conspiracy theories, the violence of language (especially online), the ruthless and immediate politicisation of national tragedies. This old recipe has been given unprecedented dynamism by social media. It is populism in its purest form: a movement purporting to represent “the many” against a corrupt and remote system.

Populism is unlikely to come to power in normal circumstances because of its evident risks. However, volatility is now “normal” and accidents happen.

The two most successful populists are Donald Trump and Emmanuel Macron. Both won only with the help of a chapter of accidents. The divisions in the Democratic Party, the peculiarities of the American voting system and the accusations directed at Hilary Clinton’s email system were crucial for Trump. The collapse of François Hollande’s Socialist presidency and the meltdown of the Parti Socialiste following Mélenchon’s populist challenge from the left, along with the “Penelopegate” scandal enveloping the conservative presidential favourite, François Fillon, have delivered both the presidency and a huge parliamentary majority to Macron. What might have resulted in Britain had the Grenfell Tower tragedy happened a few days before the poll?

***

Macron’s extraordinary victory in France, which some hail as a defeat of populism, is its most brilliant success. Macron came from outside politics, set up a new movement, and pledged to “renew” and “moralise” politics by recruiting half his party candidates from civil society and half from women, and excluding all with criminal records. His La République En Marche! has crushed the other parties. Unlike Trump, he has moved smoothly into power as if born to it.

The Fifth Republic is a “republican monarchy” and Macron seems to be pushing the system as far as it will go. His inauguration ceremonies equalled or exceeded the regal style of his loftiest predecessors, Charles de Gaulle, Valéry Giscard d’Estaing and François Mitterrand. He has been dubbed “Jupiter in the Elysée”, above the public fray, refusing to speak to journalists except in circumstances of his own choosing, and tightly muzzling his aides and ministers. Macron has ensconced himself in his palace with a tiny number of trusted young advisers – perhaps, as with Trump, a direct consequence of a populism that rejects established political elites. He has also begun an intensive centralisation and politicisation of the civil service, assuming the power to decide the reappointment or replacement of several hundred top officials.

However, Jupiter has an Achilles heel. The solidity of his support in the country is uncertain, and hence much depends on his cunning and charisma. This may seem paradoxical for the leader of a populist movement, but perhaps it is a fundamental feature of a politics that bypasses intermediaries and relies on the volatile support of the crowd-electorate: Trump, Macron, Corbyn, Farage, Mélenchon, Grillo – all one-man bands.


Emmanuel Macron’s success represents a populist eruption from the centre. Photo: Getty

In France’s recent legislative elections only 43 per cent of the electorate voted –probably the lowest turnout in a national election in its democratic history – due to uncertainty or suspicion. One survey puts the level of Macron’s positive support at only 11 per cent. His left-wing opponents have announced their intention of shifting the contest from the ballot box to the street, and Mélenchon has called for a “civic general strike”. Macron’s slick middle-class populism might have to confront the tough populism of the old left. I wouldn’t care to bet on the outcome.

How French and British politics develop in this time of volatility depends on the countries’ changing relationship with the European Union. France has chronic youth unemployment and its economic performance has long been sluggish. Some of its wounds are self-inflicted, but underlying them is the problem of the eurozone and the disparity of economic behaviour between France (and southern Europe) and Germany.

As long as the eurozone is managed as at present, this problem is insoluble. Germany is permanently in surplus and presses austerity on the laggards. France, while a less extreme case than Italy, needs Germany to agree to expand state borrowing by setting up eurobonds backed by the EU (that is, by Germany) and with an EU finance minister to control national budgets – hence, removing another core function of democratic governments. France’s future rests on Macron’s success. If his bold attempt to change France and the EU fails, it is hard to see where the country can go next.

Brexit may prove an easier prospect than that facing Macron, but its successful management – not least because of its centrality in the national debate – is equally crucial to our political stability. A crisis here could mean the wreckage of the Conservative Party, Jeremy Corbyn in Downing Street, turmoil in Northern Ireland and the breakaway of Scotland. Readers may regard some or all of these outcomes with favour.

***

Theresa May’s failure to secure a majority has revived doubts about how resolved the British really are. Labour’s side-stepping of the issue – accepting Brexit but not the Prime Minister’s version of it – was electorally clever but adds to the uncertainty. Adopting David Cameron’s approach to negotiation, Corbyn declares that “there is no such thing as ‘no deal’”. This inevitably encourages those in the EU who wish Brexit to be damaging enough to deter others: there have already been provocative statements from Jean-Claude Juncker and Guy Verhofstadt. Macron recently declared that “the door is always open” to Britain dropping Brexit; reversing national electoral choices is something the EU has past form on.

Quasi-Remainers of all parties are trying to strip the issue of everything except “jobs and the economy”, blithely denying the importance of democratic legitimacy, national sovereignty, immigration, strategic security and the future of the EU itself. Imagine the divisive effects on British politics and British society if a future government were forced to apologise for the referendum and asked to be readmitted to the EU: bitter recrimination, national humiliation, evaporation of international influence – all far beyond anything we are experiencing today

It would deliver a death blow to any attempt to reassert democratic choice over bureaucratic and financial power within Europe, and would mark the effective eclipse of national sovereignty for the foreseeable future. Nor would it make sense in the long run: the eurozone, if it is to survive, must create greater central control, which hardly anyone in Britain accepts; so we would in any case find ourselves on the outside.

The effort to restrict debate to “jobs and the economy” is based on reiteration of the dogma that Brexit threatens economic disaster. This revives the narrative created during the referendum campaign, whose most influential element was the official report produced by George Osborne’s Treasury. The IMF and the Organisation for Economic Co-operation and Development naturally followed Whitehall’s lead: that is how such bodies operate. The Treasury predicted that a “no deal” Brexit would cost around 7.5 per cent of GDP by 2030, an average loss of £6,600 per family. Even some Remainers were alarmed at what seemed a politicisation of the civil service. The former governor of the Bank of England Mervyn King has since described the report as “not an objective presentation of the facts”.

Nevertheless, the report had a huge impact on the referendum (most Remain voters said they were motivated mainly by economic fears) and its pessimism continues to overshadow the Brexit negotiations and provide grist to the mill of anti-Brexit groups in the UK and beyond: “we didn’t vote to become poorer”.

Significantly, the Treasury refuses to discuss with academics how it arrived at its forecast. However, a group of economists based in Cambridge, led by Graham Gudgin and Ken Coutts, has for the first time applied the standard scientific method of verification by trying to reproduce the Treasury’s results using the same economic models. Their findings, now accessible through Policy Exchange (“A Critique of Estimates of the Economic Impact of Brexit”), are startling.

Astonishingly (or perhaps not) the Treasury did not produce an estimate of the effects on UK trade of leaving the EU. Instead, it worked out the average importance of EU trade for all 28 member states, including the new eastern European states that do most of their trade within the EU. It also adopted a long time-scale, rather than focusing on the years since the creation of the euro – which have seen a slowing of intra-EU trade generally, and for the UK particularly.

This approach greatly magnifies the importance of EU trade for Britain, which is less than for any other EU country, and which has been declining in importance for years. Finally, the Treasury made the extraordinary assumption that if Britain did less trade with the EU, it would not be able to compensate significantly by embarking on more trade outside the EU – even though its non-EU trade has been growing and shows a favourable balance. In consequence of these methods, the Treasury prediction of the results of a “hard Brexit” was a considerable exaggeration.

Using the same methods as the Treasury, but applying data relating specifically to the UK rather than to the EU as a whole, the Cambridge researchers reach a very different conclusion. Even if it proved impossible to reach a free trade agreement and the UK reverted to trading under WTO rules (“falling off a cliff”, as some express it) there would be “only a minor loss” in overall GDP by 2030, as tariffs in 90 per cent of products have already been more than compensated for by the fall in a previously over-valued sterling. As for per capita GDP – that is, average living standards – they predict that this could actually rise if the rate of immigration were reduced.

So no deal is clearly better than a bad deal, including the “soft Brexit” advocated by Corbyn and others: to leave the single market but stay in the customs union. This would mean being unable to trade freely either inside or outside the EU or to influence EU policies from within.

In short, we have no reason to be frightened by the Brexit negotiations. Being inside or outside the EU has made no difference to our economic fortunes: our national wealth has increased at exactly the same rate as that of the US for the period since 1945. We are not facing economic disaster. It is not the case, as Nick Clegg recently asserted, that we face a choice between “painful concessions” and “economic disruption”.

Moreover, Britain is a major power independently of its ties with the EU. The international relations specialist and New Statesman contributing writer Brendan Simms estimates that it is the third power in the world after the US and China because of its wealth, size, “soft power”, military potency, and its relative internal cohesion and long-term political stability. A good relationship with Britain is important for the security, stability and prosperity of the whole European continent. Unless we play our hand extraordinarily badly in these negotiations, the outcome should reduce the potential of that volatile populism of which we are presently feeling the shock: volatility, after all, is a two-way process.

Peter Mair feared the democratic world was losing control of its political institutions, and thought it “not at all clear how that control might be regained”. Brexit should, as many of us hope, provide the beginning of an answer.

Robert Tombs is the author of “The English and their History” (Penguin) 

This article first appeared in the 24 September 2012 issue of the New Statesman, Lib Dem special